In California, seniors are the largest group borrowing emergency funds online. Recent laws are attempting to improve online lending by requiring sites to provide price comparisons.

Most Americans Can’t Afford a $400 Emergency

The US government surveyed a group of Americans on what they would do if they had to pay an unexpected expense of $400. Of those, 47% reported they did not have the cash available to pay for an unexpected emergency. Most said they would have to borrow the money from someone or sell something to cover the cost. The data shows that for low-income earners an unexpected emergency could leave them in spiraling financial distress.

But, People Need to Borrow Funds is not a lender, but instead, it offers a type of match making tool for distressed borrowers to find the emergency funds they need. The rates are higher than most traditional lending, but the funds are more accessible to distressed borrowers. In recent years, government officials have focused on improving transparency into these types of loans. Over time, stringent reporting requirements have made distressed lending among the most used sources of funding for low-income borrowers.

In California, the largest consumer demographic accessing emergency funds were senior citizens. Jamie Fulmer, a spokesman for Advance America, Cash Advance Centers Inc. in Spartanburg, N.C., notes that millions of Californians are living paycheck to paycheck. Emergency funds, despite their higher interest rates, serve a definite need according to Fulmer.

While government officials continue to scrutinize emergency lending, blocking high-interest lenders entirely could be devastating for low income borrowers with no alternative funding programs in place.

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